Autumn Budget 2025 – 5 tips to help save on capital gains tax

Rumoured changes to capital gains tax (CGT) have been swirling with the government keen to drum up additional receipts. We’ve already seen cuts to the capital gains tax allowance in the past, further changes could be on the cards.

In the 2022/23 tax year, you could realise a gain of £12,300 and pay no CGT. But just two years later, the allowance is down to £3,000.

Meanwhile last year’s Budget hiked the rate on funds, shares and some other assets from 20% to 24% for higher rate taxpayers and from 10% to 18% for basic rate taxpayers.

This leads to more people facing paying more of this tax, and for some other people, being exposed to it for the first time.

It’s why it’s notable that HMRC figures show CGT receipts in the most recent tax year were actually lower than they were a year earlier.

The risk now is that people could be hoarding assets, which can mean they hang into assets that are wrong for their circumstances and pay the price in other ways.

Fortunately, there are five more sensible alternatives.

This article isn’t personal advice. ISA, pension and tax rules can change, and their benefits depend on your circumstances. If you’re not sure what’s right for you, ask for financial advice.

Investments fall as well as rise in value, so you could get back less than you invest.

Consider realising gains as you go along.

You get a CGT allowance on an annual basis and once the tax year ends on 5 April, it’s gone for good.

You can often choose when to take a capital gain, so you can do it each tax year and make £3,000 of gains tax free.

If you’re building up a big gain, you might be able to realise it gradually in smaller amounts, over a period of years.

Plus if you have investments outside a Stocks and Shares ISA, you can use the Share Exchange process (Bed & ISA) to move eligible assets into an ISA.

With Share Exchange you can sell your shares in your HL Fund and Share account, using part of your CGT allowance, move the cash into the ISA wrapper and buy back the same shares again, all in one instruction.

You have to stick within your overall £20,000 ISA allowance though and before using Share Exchange make sure you look at all the considerations for example charges. .

Once in an ISA, you won’t pay further UK tax on either capital gains or income. Because the dividend tax rate is generally paid at a higher rate than the capital gains tax rate, it’s often worth prioritising income-producing investments when making decisions about how to use your ISA allowance.

By investing through a Stocks and Shares ISA, you can avoid CGT completely.

This makes a huge difference both when you sell up and cash out and whenever you rebalance your portfolio as you go along.

Adding money into a pension like a Self-Invested Personal Pension (SIPP) will also grow free of CGT – plus you get tax relief on contributions into the bargain. How much you can pay in and the tax relief you get depends on your circumstances. You can usually access money in a pension from 55 (rising to 57 in 2028).

Don’t forget, you can offset any capital losses you make during the tax year against gains.

If your total taxable gain is still over the tax-free allowance, you may be able to deduct any unused losses from previous tax years.

Then, if just some of your losses reduce your gain to below the tax-free allowance, you can carry forward the remaining losses to a future tax year.

If you’re married or in a civil partnership, you can transfer the ownership of some assets to your spouse or civil partner.

There’s no CGT to pay on the transfer and they have a CGT allowance of their own to take advantage of, so a chunk of the gain may not be subject to tax.

They can move the assets into an ISA at the same time – using the Share Exchange process.

Alternatively, if your spouse or civil partner pays a lower rate of income tax, you can consider moving income-producing investments into their name, so the income will be taxed as theirs rather than yours.

Venture Capital Trusts (VCTs) are collective investments, where investors buy a share in a trust, which then invests in companies.

The underlying businesses the VCT invests in are small, relatively new, and have big growth plans.

However, they also tend to have more ups and downs than larger companies, and there’s a higher risk they could fail. As a result, they’re classed as very high risk, so they aren’t right for everyone.

If investors do use these schemes, VCTs have some tax benefits, including:

• Up to 30% income tax relief on what investors put in VCTs as part of new share issues, as long as they invest for at least five years –subject to an investment allowance of £200,000.

• No capital gains tax when you sell.

• No tax on dividends from VCTs.

Though it’s worth remembering, it can be hard to access your money in the short term. VCTs should only be considered for larger portfolios, held by experienced investors who have already used their ISA and pension allowances and typically pay a higher rate of tax.